Your Comprehensive Guide to Personal Finance

A deep dive into Personal Finance and everything it entails.

Key Takeaways

Personal Finance is a way to manage money to meet your long and short-term goals.
It entails financial services and products that enable saving, investing, and money management.
Personal Finance management inculcates financial literacy and empowers you to make informed money management decisions.
It also helps in being financially prepared for emergencies or future expenses.
Most banks in India provide an array of Personal Finance solutions.

Making money is only half the battle; the other half is planning your finance to reap the most benefits. You need a strategic financial plan to prepare for your future, handle emergencies, and create more wealth. While you might have heard the term, many still ask, what is personal finance and how does it help? To ensure you make informed decisions about financial management, read on to learn about personal finance.

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What is Personal Finance?

Personal finance is an umbrella term that includes concepts like money management, saving and investing, tax planning, retirement planning, and much more. It also includes budgeting, mortgages, insurance, and other banking practices. Essentially, you can boil down the personal finance meaning to include products and services that empower you to make informed personal financial decisions to meet your goals.

Why is Personal Finance Important?

The importance of personal finance lies in helping you prepare for future uncertainties and life changes. Financial literacy is a set of skills that can help you distinguish between good and bad financial advice and assist you in making better decisions. Yet, since your school and college syllabus does not cover money management, you can learn the basics through free online courses, read up articles, watch financial education videos and more.

Further, personal finance also helps you prepare for the contingencies that lie ahead in life. While no approach can be foolproof, with personal finance-based planning, you are more prepared to meet any challenges in the future. Simple, practical steps like managing your cash flow effectively, paying income taxes, opting for beneficial investment instruments like mutual funds, tax-saving instruments etc., can prove helpful.

Areas and Principles of Personal Finance

Personal finance refers to the management of money through spending, saving, borrowing, and planning for future goals.

It includes key focus areas:

Budgeting: Planning income and expenses.
Saving: Setting aside money for short- and long-term needs.
Investing: Growing wealth over time through financial instruments.
Insurance: Protecting against financial loss.
Retirement Planning: Preparing for life after active income.
Debt Management: Using credit responsibly and repaying on time.

These areas form the foundation of personal finance rules. Following them supports long-term financial health.

Personal Finance Planning Process

To execute successful financial planning, you should determine your monetary objectives. To this end, you must define your short and long-term financial goals. For instance, you might require funds for the short term to make a large purchase or plan a wedding.

You also need to arrange for long-term prospects like buying a house or saving for retirement. Learning how to manage personal finances starts with setting clear financial goals along with your income, expenses, and constraints.

To plan effectively, tools like a savings interest calculator can help you estimate how much your savings will grow over time and align them with your future goals.

Personal Finance Budget – Example

If you earn INR 60,000 a month, you might often wonder where it all goes. Bills, groceries, weekend plans—by the end of the month, there’s little left to save. That’s where the 50-30-20 rule can help.

Here’s how it works:

INR 30,000 (50%) covers your needs—rent, groceries, electricity, mobile bills, and transport.
INR 18,000 (30%) goes toward wants—dining out, OTT subscriptions, clothes, and leisure.
INR 12,000 (20%) is set aside for savings and debt payments.

You can place the savings in a Digital Saving Account, like the one from DBS Bank, which offers up to 5.5% interest, helping your idle funds grow while keeping them separate from everyday spending.

This simple rule brings structure to your monthly spending. It forms part of essential personal finance basics and helps you stay on top of your money every month. Other popular budget methods include the 80-20 rule, the 70-20-10 rule, and the zero-based budget.

Personal Finance Services

In India, several services help manage money more effectively. These include:

Banking products such as savings accounts and fixed deposits
Credit options like personal loans and credit cards
Investment platforms offering access to mutual funds, stocks, and bonds
Insurance plans for life, health, and property
Advisory services for goal-based financial planning

As part of everyday personal finance India, mobile tools support better control over income, spending and saving. For instance, the DBS Bank digibank app offers 250 plus banking services on your phone, helping you manage money smarter. You can easily open savings account online with DBS Bank, making access quick and simple.

Basics of Personal Finance Investing in India

Personal finance investing involves putting money into different financial tools to generate returns and build wealth.

Popular Investment Options

Mutual Funds: Diversified exposure with professional fund management.
Stocks: Direct investment in listed companies.
Fixed Deposits: Low-risk investments with guaranteed returns.
Public Provident Fund (PPF): Government-backed long-term savings.
National Pension System (NPS): A structured retirement savings scheme.

Tax-Efficient Investing Strategies

Tax-saving instruments offer benefits under Sections 80C and 80D of the Income Tax Act:

ELSS Funds: Shortest lock-in under 80C with equity exposure.
PPF and NPS: Long-term, tax-deductible contributions.
Tax-Saving FDs: Fixed returns with 5-year lock-in.
Health Insurance Premiums: Deductions available under Section 80D.

Personal Finance Tips for Better Money Management

These simple personal finance tips can help manage money more effectively:

Track your monthly spending.
Set clear savings goals.
Pay bills on time.
Avoid unnecessary debt.
Build an emergency fund.

Make sure your savings are placed in an account that offers competitive savings account interest rates, so your money continues to grow even while it’s idle.

Following these steps highlights the importance of personal finance. Small habits can lead to long-term financial control.

Key Factors to Consider in Personal Finance

For security purposes, the best place to safeguard your money is in a bank account. Not only is it protected through solid security measures, but you can also earn interest income on funds parked in your Savings Account.
You can easily access money stored in your bank account through debit and credit cards, ATMs, online banking, etc.
You can opt for investment banking services to speed up wealth creation. You can invest in various instruments and save money to create a corpus for retirement.

Final Note

At DBS Bank, you can avail of various products and services to plan your personal finances. With a host of services to suit your needs, you can also access financial management investment products and solutions through your digibank mobile banking app and internet banking platform.

Download the DBS Bank app to get started.

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*Disclaimer: This article is for information purposes only. We recommend you get in touch with your income tax advisor or CA for expert advice.